Brookfield Emerging as ‘White Knight’ for SunEdison’s TerraForm

  • Acquired 11.1 million Class A shares, giving it a 12% stake
  • Approached SunEdison about buying controlling Class B shares

Brookfield Asset Management Inc., Canada’s largest alternative asset manager, has emerged as a key investor in SunEdison Inc.’s TerraForm Power Inc. yieldco.

Brookfield, through various units, acquired almost 11.1 million of TerraForm’s Class A shares for about $98.5 million, according to a filing Wednesday. That gives it a 12 percent stake and makes the Toronto-based company the largest shareholder. 

It also entered into swap agreements to potentially buy almost 11.6 million additional shares, and disclosed that it’s expressed interest in buying SunEdison’s Class B shares that provide control over TerraForm, though no specific proposal “is currently pending,” according to the filing.

The deals show that TerraForm’s portfolio of operating wind and solar farms has value, even though parent company SunEdison is embroiled in the year’s biggest bankruptcy.

“It seems like an inherent positive that a major and well respected asset manager, more so than, say, a hedge fund, is seeing value in TerraForm,” Matt Tucker, an analyst with KeyCorp, said in an e-mail Wednesday.

‘White Knight’

The news boosted TerraForm’s shares 18 percent to $10.34 at the close in New York, the most in more than six months.

Brookfield may be TerraForm’s “white knight,” according to Michael Morosi, an analyst at Avondale Partners LLC, who upgraded TerraForm’s Class A shares to the equivalent of buy. TerraForm’s assets could be a good fit for Brookfield, which owns and operates more than 250 clean-energy plants with more than 10 gigawatts of capacity, according to its website.

“They’re in a position to take over operationally from SunEdison,” Morosi said. “It’s about keeping the plants’ cash flowing, which right now is the much bigger concern for TerraForm.”

A Brookfield spokeswoman declined to comment, and a SunEdison spokesman didn’t immediately respond to an inquiry seeking comment.

BlueMountain Capital and Appaloosa Management LP, the hedge fund of billionaire David Tepper, are now the second- and third-biggest holders of TerraForm Power. SunEdison, which filed for bankruptcy in April, owns Class B shares of TerraForm and sister yieldco TerraForm Global Inc.

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